Case Study: Service Provider Xcelerate Speeds CommerceScout Along New Trail

Sometimes when you start out on a journey, a guide can direct you to a
destination quite different from the one to which you originally had set
course. Such is the case for CommerceScout, a dot-com located in Seal
Beach, California. Their destiny was forever altered when they enlisted
the services of Florida-based e-business service provider Xcelerate to
serve as a trail guide.

User
Background

Eyeing the enormous potential of the B2B Marketplace, Steve Oakley, a
software industry veteran, founded CommerceScout In November 1999, with
the initial business model to provide transaction processing and order
fulfillment services to online auctions. However, through its interaction
with Xcelerate, this business model was replaced with one that would bring
buyers and sellers together across multiple marketplaces.

Vendor
Selection

The paths of the two companies crossed as a result of a preexisting relationship
between company executives, which netted CommerceScout a few days of complimentary
consulting. "I was just very impressed with their brainpower," said Steve
Oakley, President and CEO of CommerceScout; "The Xcelerate consultants
quickly became indispensable members of the team."

It
should be noted that the two consultants who showed up on Steve Oakley's
doorstep were the ones who he wanted on the team throughout CommerceScout's
engagement with Xcelerate.

Establishing
the Engagement Process

Having demonstrated their value during the initial consultation, Xcelerate
agreed to accept work one short-term contract at a time. This demonstrated
Xcelerate's confidence in their ability to deliver ongoing value to the
client and reap continued business. It afforded CommerceScout a high degree
of flexibility and the ability to maintain control of their destiny without
subjecting them to the constraints of a longer-term contract. Overriding
the contractual arrangements was a sense of partnership that developed
between the two parties.

Vendor
Services & Value of Solution Delivered

During the initial joint meetings the team examined the de facto strategy.
Xcelerate was a major player in the rapid analysis of the market opportunity,
potential competitors, and technical challenges. The team concluded that
they were heading into very dangerous waters as existing major players
were well positioned to enter the market space.

Going
back to the drawing-board, the team identified that there was a genuine
opportunity to create a portal for multiple marketplace management. In
other words, offer end users visibility and navigational tools that span
multiple marketplaces in a vertical segment (i.e., electronic components,
chemicals). Excited by the prospects, CommerceScout contracted with Xcelerate
for another three-week engagement to validate the concept and strategy
before fully committing to it. (This also set the model for the contractual
relationship between the two parties; with CommerceScout contracting Xcelerate
for each discrete phase of the project.).

As
the project continued Xcelerate became deeply involved in the development
of the CommerceScout service. The joint development team made up of five
CommerceScout personnel and seven Xcelerate personnel set up shop in Xcelerate's
Atlanta development Supercenter. Although Xcelerate is a "Pure play" digital
business service provider, CommerceScout chose to outsource marketing
(branding & image) to a local southern California firm. CommerceScout
is now certain that Xcelerate could have done the marketing piece, but
admit that they were simply uncomfortable being reliant on a single vendor.

Overall,
CommerceScout has been very happy with its relationship with Xcelerate.
Early weaknesses such as a perceived disconnect related to integrating
certain marketing functions into the project plan and perceived high relative
percentage of project management time within the plan were quickly and
satisfactorily responded to by Xcelerate. Once the present initiative
to wirelessly enable the CommerceScout service is complete, CommerceScout
envisions maintaining Xcelerate on some type of retainer basis. Either
way, the connection between the two companies will continue, either formally
or informally, as Bruce Frcek, President, CEO and Chairman of Xcelerate
now occupies a seat on CommerceScout's Board. CommerceScout's Oakley envisions
a day 12-18 months down the road where they will have in-house talent
to meet most of its needs.

Oakley
says he is a very satisfied client, giving Xcelerate high marks across
the board for their strategic and technical digital business skills as
well as their ability to execute and meet deadlines.

The
capabilities that CommerceScout achieved from Xcelerate enable it to provide
frictionless marketplace participation in a network of marketplaces. This
effectively creates markets without boundaries. CommerceScout can now
provide an integrated suite of tools to buyers to cross marketplace boundaries,
and by integrating functionality into sell-side marketplaces to interact
with the buyer tools, CommerceScout thereby provides support for the full
buyer/seller cycle. Currently, CommerceScout is developing end user (buyer)
e-market tools that will be sold as stand alone modules. These products
include Track, Watch, Communicate, Analyze, Negotiate, Automate, Procure
and Sell, whose names obviously indicate the suite of capabilities CommerceScout
is providing or intending to provide.

CommerceScout
also makes its money from a combination of license fees and small transaction
fees automatically notched up with each transaction. Transaction fees
are derived from e-markets that create order fulfillment as a result of
the CommerceScout Network conduit. License fees are derived from end users
(Contract Manufacturers), and from e-markets looking for additional functionality
and analytical reporting across multiple marketplaces.

Vendor
Recommendations:

CommerceScout was impressed with Xcelerate's ability to recruit and
retain high quality people. This is often an under-appreciated sales
angle for vendors, particularly those who rely on sales people alone.

Xcelerate secured CommerceScout's business through the use of "complimentary"
consulting days.

Xcelerate demonstrated a high degree of flexibility with respect
to contractual arrangements, agreeing to short-term (often 3-4 week)
contracts that were continually renewed.

Meeting deadlines with a quality deliverable is the most significant
demonstration of the service provider's commitment to your client.

User
Recommendations:

Maintain control of your projects and your destiny. If this means
breaking up projects into smaller pieces and smaller vendor contracts,
so be it. If vendors are unwilling to be flexible to this type of arrangement,
then maybe you should keep looking.

Recognize the value of creating a true partnership with key vendors.
This means being flexible with respect to demands and work arrangements.

Be open to changing direction in the light of convincing evidence.
Verifying your business model is essential in a rapidly changing environment,
particularly where major players can enter rapidly at low cost.

Xcelerate has proven to be an indispensable partner for the CommerceScout
team, advising them of the risks of the path they were on and collaborating
with them to find better opportunities. Xcelerate provided services ranging
from market research to business model and strategy development to the
construction of CommerceScout's B2B Multiple Marketplace Management portal,
i.e., a full end-to-end services delivery. However, it should be borne
in mind that the project size can impact the user decision on which vendor
can deliver an adequate number of quality people.

Glossary
of Terms

B2B - Business to Busienss

DBSP
- Digital Business Service Provider

Incubator - a location that provides basic business services and
assistance in launching a new business, usually including expert business
strategy help, low-cost office facilities, and financing / fund-raising
aid. Typically companies remain in an incubator for less than two years.

SuperCenter - a center where effectively full end-to-end services
for defining, creating, building and testing a digital business are provided
under one roof. This is Xcelerate's term; other companies refer to it
as an Accelerator facility (Andersen) or plain test center. Note that
this is not an Incubator.